Sweeping Change to Michigan’s Marketable Title Act Could Affect Most Commercial Properties

On December 28, 2018, the Michigan Legislature amended Michigan’s Marketable Record Title Act. The amendment seeks to clean up title by eliminating the enforceability of certain documents that were recorded more than 40 years ago. The intent was partly, but not exclusively, to eliminate old building and use restrictions from title. For example, if in 1981 the developer of an industrial park, strip mall, office building or residential subdivision recorded restrictions permitting (or prohibiting) certain property uses, or restrictions regulating building size, shape or color, those restrictions will automatically terminate in 2021!

What now? If a property owner now wants to preserve a recorded restriction, then the restriction must be referred to by liber and page in a later recorded document. It is anticipated this will happen most frequently in the “subject to” line of a deed. Common practice in Michigan is to transfer property “subject to easements and restrictions of record”, without citing a particular liber and page. This will no longer preserve old restrictions.

The law provides a 2 year window for recording an affidavit of interest to preserve the effectiveness of documents recorded more than 40 years ago. After the 2 year window closes, a deed or affidavit of interest referencing the prior document by liber and page, must be recorded within 40 years from the date of the original or last recording of the restriction being extended. Otherwise, the restriction terminates automatically by operation of law, and it is no longer enforceable.

Bottom line: this law requires affirmative action by parties who desire to preserve the effectiveness of old recorded building and use restrictions. This includes restrictions pertaining to all kinds of commercial developments, and possibly even restrictions limiting environmental use of contaminated sites. This new law goes into effect on March 28, 2019.